China: Shagang Steel cuts scrap purchase prices for third time in Aug'21

China's largest electric-arc furnace (EAF) steelmaker, the Jiangsu Shagang Group, has slashed its scrap purchase prices for Aug'21 by up to RMB 50/tonne ($8/t) across all grades, sources informed SteelMint. This is the third price cut announced by the company in Aug'21. In the previous week, the company had lowered prices by similar levels.

After the current revision, prices for HMS (6-10 mm) stand at RMB 3,700/t ($570/t), inclusive of 13% VAT, delivered to headquarters. Prices have dropped amid decrease in prices of raw materials and domestic steel.

Factors supporting price cuts

• Chinese domestic billet prices fall: Domestic billet prices in China have fallen sharply by RMB 230/t ($35/t) against the closing price of last week which was reported at RMB 4,880/t, inclusive of VAT. Overall billet trading, however, remained uncertain.
  
  

• Steel futures plunge: As per SteelMint data, China's re-bar futures contract for Jan'22 delivery witnessed a steep drop of RMB 311/t ($48/t) since the beginning of this week. Prices closed today (19 Aug'21) at RMB 5,017/t. Steel production cuts in H2CY'21 have weighed down market sentiments.
  
  
• Iron ore spot prices fall: The spot price of iron ore Fe 62% fines fell by $3/t on 17 Aug'21 to $159.5/t CFR China on less buying interest. Premiums of mainstream medium-grade iron ore fines continued to fall on lower demand. Market participants believe that demand will remain subdued in the near term amidst prevailing bearish sentiments in the market.
  
  
• Shagang cuts domestic rebar prices: Shagang Steel lowered rebar prices by RMB 200/t ($31/t) for mid-Aug'21 while keeping wire rod and coiled rebar prices unchanged. Current prices for rebar (16-25mm) are at RMB 5,500/t ($849/t) ex-mill, inclusive of taxes.
  
  
• Imported scrap deals limited: China's imported scrap market has remained less active with Japanese offers remaining quite far from the reach of Chinese buyers. However, offers for South Korean scrap were heard at $560/t CFR China.